Canadian Shield Resources Inc.
TSX VENTURE : CSP

Canadian Shield Resources Inc.

September 02, 2005 13:40 ET

Canadian Shield Increases Interest In Peruvian Properties To 66%

TORONTO, ONTARIO--(CCNMatthews - Sept. 2, 2005) - Canadian Shield Resources Inc. (TSX VENTURE:CSP) ("Canadian Shield" or the "Company") announces that it has increased its interest in Gallant Minerals Peru Ltd., S.A. ("Gallant Peru") from 33% to 66% pursuant to a purchase and sale agreement dated August 30, 2004 with Gallant Minerals Limited ("Gallant Minerals") to acquire up to 90% of Gallant Peru (see Press Release of September 1, 2004 at www.canadianshieldresources.com).

Canadian Shield has increased its interest in Gallant Peru from 33% to 66% by:

(i) completing US$500,000 of exploration expenditures;

(ii) paying US$175,000 to Gallant Minerals;

(iii) issuing 585,000 common shares of Canadian Shield at a deemed price of CDN$0.40 per share to Gallant Minerals; and

(iv) issuing 585,000 warrants to purchase one common share of Canadian Shield at CDN$0.40 per share to Gallant Minerals, expiring after August 30, 2006.

Canadian Shield can further increase its interest in Gallant Peru by August 30, 2006 from 66% to 90% by:

(i) completing an additional US$1. million of exploration expenditures, of which US$187,968 has been completed;

(ii) paying US$175,000 to Gallant Minerals;

(iii) issuing an additional 585,000 common shares of Canadian Shield at a deemed price of CDN$0.40 per share; and

(iv) issuing an additional 585,000 warrants to purchase one common share of Canadian Shield at CDN$0.40 per share to Gallant Minerals, expiring after August 30, 2007.

If Canadian Shield does not elect to fund the minimum cumulative exploration expenditures of US$1.5 million by August 30, 2006 to acquire the additional 24% interest; then Canadian Shield's 66% interest will be converted into a fully paid and non-assessable 22% interest in Gallant Peru. Gallant Minerals will not have any obligation to fund the exploration program, business or operations of Gallant Peru in order to maintain its interest in Gallant Peru.

"This milestone is a significant step forward for Canadian Shield and confirms our continued confidence and commitment to the Gallant Peru properties. We exceeded our work commitments in our first year of exploration and we are excited about our upcoming drilling program", said Lynda Bloom President & CEO of Canadian Shield.

Gallant Minerals is a private holding company, owned by Mohamed Al Fayed with interests in mineral exploration rights in Peru and Mongolia.

Canadian Shield Resources Inc. is currently focused on the acquisition, exploration and development of precious metal and base metal properties in Peru. The Company's shares are listed on the TSX Venture Exchange (Trading Symbol CSP: TSX V).

THE TSX VENTURE EXCHANGE HAS NOT REVIEWED AND DOES NOT ACCEPT RESPONSIBILITY FOR THE ADEQUACY OR ACCURACY OF THIS RELEASE.

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